Small Scale Commercial Uses in Residential Neighborhoods

What's happening?

The City is preparing code amendments to allow for permitting of small scale commercial uses in residential areas in order to allow for small businesses that can provide goods and services to nearby residents of the neighborhood.

Staff will draft the proposed amendments based on initial community input from the survey below and any written comments received. This community guidance will provide staff with the information needed for the first draft of the amendments. The first draft will be made available to the community for review prior to a briefing for the Planning Commission.

Background

During the process of updating the City of Olympia Comprehensive Plan in 2025, the Olympia City Council discussed allowing a limited range of small businesses within residential neighborhoods as a way to provide nearby residents with options for goods and services. These businesses are to be allowed through a conditional use permit which will control the type of business, the scale and size, and apply other design requirements intended to minimize impacts on surrounding properties. The City Council placed this set of amendments on the Community Development Department Work Plan in 2026.

There have been two bills that were recently proposed, but not passed, in the Washington State Legislature that would have required cities to allow certain small scale commercial uses within neighborhoods. Senate Bill 5421 would have required cities to allow "neighborhood business" which was defined as “(a) An establishment that serves a limited menu of food items that may include alcohol, and has at least 500 square feet of gross floor area, not exceeding 2,000 square feet, and where outdoor seating is limited to no more than 30 percent of the gross floor area” and “(b) A retail establishment primarily engaged in the sale of groceries, household goods, or locally produced products, with a gross floor area not exceeding 10,000 square feet.” House Bill 1175-S2 would have required cities to allow a "Neighborhood café" which was defined as an establishment that has at least 500 square feet of gross floor area. It also would have required cities to allow a “Neighborhood store" which was defined as a “convenience grocery store or mini-market that provides a variety of convenience items that may include, but are not limited to, food, beverages, and household items. A neighborhood store must be at least 500 square feet of gross floor area.”

Tell us what you think!

Take the survey below to share your thoughts on the types of businesses that should be allowed, their scale/size, and other requirements that you feel are needed to minimize impacts on nearby properties within the neighborhood.

Survey closes September 15, 2026.

If you prefer to provide written comments, please email Senior Planner David Ginther at dginther@ci.olympia.wa.us.

Letters may be sent to:

David Ginther
City of Olympia Community Development Department
PO Box 1967, Olympia WA 98507-1967